Derivs - Credit

JPMorgan estimates investors unwinding synthetic collateralized debt obligations will buy up to USD200 billion in single-name credit default swaps and sell around half that in index protection as they look to rebalance their books.

Bank of America Credit Strategist Jeffrey Rosenberg has argued credit default swaps would only be triggered in the event a government took over the bulk of any firm’s assets and began running its day-to-day operations.

Martin Hartmann, the newly appointed head of fixed income and currency structuring for the merged Commerzbank and Dresdner Kleinwort in London, is tipping credit to lead a recovery in the markets.

Areca Investment Management has launched its maiden fund of funds—the Areca Value Discovery Fund. Dislocations in the credit markets mean that paper at the top of the capital structure is trading at huge discounts and Areca has picked hedge fund managers that will try and take advantage of this.

An executive committee meeting to be held Monday by the U.S. Structured Products Association will hash out how best to deal with an expected firestorm of government regulation on the industry, and whether it can self-regulate.

Having recorded its first negative year in more than two decades with a 26.8% loss in 2008, Richard Perry’s Perry Capital is pinning its hopes of a turnaround on its ability to benefit from defaults, capital structure arbitrage plays, and securitized products.

Standard & Poor’s has fielded calls about tying structured products to the family of credit default swap indices it unveiled yesterday. Its CDS U.S. Index matches the basket of stocks in the S&P 100 equity index.

Credit default swaps on Liz Claiborne were not triggered after much debate Tuesday, following changes the company made to its credit facility recently.

Loïc Fery, the former global head of structured credit at Calyon, is hoping to launch a credit fund early next month at his London startup, Chenavari Credit Partners. The Chenavari Credit Dislocation Fund will begin by focusing on convexity plays.

Credit data provider Credit Market Analysis is opening a regional office in Singapore in February.

Banks and funds in Asia are seeing a slew of negative basis trade opportunities in the financial sector but are unable to get the financing to execute.

Buysiders and sellsiders are being invited to a Jan. 29 forum at the Times Center in New York aimed at educating investors about pending changes to credit default swap contracts.